Supervening illegality and international commercial arbitration
University of British Columbia
Master of Laws - LLM
This thesis examines states' influence—in the form of supervening illegality, or subsequent changes in legislation—on international commercial transactions. The topic will be examined with reference to the major world legal systems and international law and practice. A large number of international transactions are carried out under the complex terms of government intervention. However, from the present doctrinal concepts, statutory frameworks, and judicial and arbitral practice, it is possible to infer that no absolute protection from state and government intervention exists as such. The problem of frustration of contracts, as framed in all national jurisdictions and explained in fairly detailed legal theory, does not presently have any uniform remedy for parties in international trade. The study begins with a brief comparative survey of the terminology that will be used in the thesis and then moves to related general principles and theories of contract law in civil and common law countries: party autonomy, public policy, force majeure, frustration, state immunity, state sovereignty, etc. Next, it examines the status of contractual parties in international transactions within the context of changed circumstances. The inquiry includes judicial and arbitral practice related to supervening illegality. Several countries' statutory frameworks with regard to force majeure, frustration, remedial modalities, and arbitration will be introduced as well. Finally, a wide variety of international trade contracts will be examined in order to illustrate present contract drafting techniques. In the conclusion, this thesis advocates efficient and equitable adjustment of contracts and allocation of risks of loss from nonperformance caused by supervening illegality. This would be based on careful drafting of force majeure and arbitration clauses. In order to protect and ensure their interests, parties are advised both on how to define the right to adjust or terminate the contract and on the circumstances under which they could rely on that right.
Law, Peter A. Allard School of